UAE. Maktari, the so-called 'Gold Hand', the international gold trader who some believe can control the price of gold, has today forecasted gold to reach US$2,200 per ounce by the end of 2011.
In a commentary emailed to BI-ME, Maktari said: "At the start of the year, many analysts, including myself, predicted gold would reach up to US$1,600 an ounce before the end of the year, given the dire global economic situation and the yellow metal's appeal as a safe haven. But as the months rolled on, most analysts had to revise their outlook upward, and more so since the beginning of August and the downgrade of US debt."
"2011 has surely been one of the best years for gold as prices have risen more than 25% this year", he wrote.
"Everyone was surprised by gold’s historic rally above US$1,900 in such a short period time and a pullback was therefore expected," Maktari added.
"Short term pullbacks are to be expected as this is usually caused by profit taking, so investors shouldn’t get spooked by a sudden drop if no hard data (fundamentals) support the pull back."
"It’s temporary and it will eventually correct itself and then the upward trend will resume," the international trader stressed.
The recent gold rally is a signal of how stressed and vulnerable the US and EU economies have become and therefore we can expect gold to continue its uptrend and eventually hit new record-highs, he said.
Regarding his own gold forecast till the end of the year, "the answer depends on one main factor," Maktari said. "Will Ben Bernanke signal or initiate a new round of QE?"
"The slightest hint of more Fed money printing will surely trigger another gold rally onwards to US$2,000 an ounce," he said.
"Ben Bernanke’s speech at Jackson Hole was carefully prepared in order not to upset the markets and in turn see the dollar plunge against most currencies. The decision to address again the Fed's policy on September 20th is in the hope that markets would calm down by then, but as far as most traders and investors are concerned, he is only delaying the inevitable", Maktari wrote.
"With interest rates close to zero, a weak dollar and no clear outlook for the US or Europe, markets are very vulnerable which only adds fire to the gold market as investors try to protect their wealth."
"UBS said a pullback of US$100 - US$150 represents a buying opportunity to be followed by a surge to US$2,100 per ounce by year end. "
"I can see this happening as soon as November 2011, but given that every sharp rise usually suffers a pullback at some point, gold could top US$2,100 - US$2,200 by December 2011 before a pullback of at least US$300 due to profit taking, " Maktari predicted.
"However, with gold demand being higher than mining output, gold will enjoy greater demand than output which beckons for higher prices, if not rapidly, then surely gradually," he said.
This imbalance can already be seen as Indian and Chinese investors are not deterred by higher prices and continue to buy the precious metal. The upcoming Indian wedding season will see gold being snapped up even faster, putting more strains on gold prices and pushing them even higher, he added.
Maktari's end of year outlook (if QE3 is announced): Gold at US$2,000 - US$2,200. Silver at US$45 - US$53.
In a 2009 interview, asked what makes him so sure about his predictions and how he managed to bee so right thus far, Maktari said: “I study the markets and follow the trends. I know what is happening behind the scenes and I know how the markets will react in such times. It doesn’t take a rocket scientist to understand which direction gold will go in through certain times of the week or month. It’s about constantly studying the gold market and understanding its movements”.
"Those who know me will all say that I have been saying things about the gold price for years and I am usually on target about my opinions. At the end of the day, that’s what they are, my opinions," Maktari added.
Note: Mamoon Maktari is Head of Gold Trading at Middle East Gold Trading in the UAE.